Correlation Between Engie Brasil and Exelon
Can any of the company-specific risk be diversified away by investing in both Engie Brasil and Exelon at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Engie Brasil and Exelon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engie Brasil Energia and Exelon, you can compare the effects of market volatilities on Engie Brasil and Exelon and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Engie Brasil with a short position of Exelon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and Exelon.
Diversification Opportunities for Engie Brasil and Exelon
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Engie and Exelon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Exelon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exelon and Engie Brasil is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Engie Brasil Energia are associated (or correlated) with Exelon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exelon has no effect on the direction of Engie Brasil i.e., Engie Brasil and Exelon go up and down completely randomly.
Pair Corralation between Engie Brasil and Exelon
Assuming the 90 days horizon Engie Brasil Energia is expected to generate 1.39 times more return on investment than Exelon. However, Engie Brasil is 1.39 times more volatile than Exelon. It trades about 0.15 of its potential returns per unit of risk. Exelon is currently generating about 0.17 per unit of risk. If you would invest 580.00 in Engie Brasil Energia on October 25, 2024 and sell it today you would earn a total of 31.00 from holding Engie Brasil Energia or generate 5.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Engie Brasil Energia vs. Exelon
Performance |
| Timeline |
| Engie Brasil Energia |
| Exelon |
Engie Brasil and Exelon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie Brasil and Exelon
The main advantage of trading using opposite Engie Brasil and Exelon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Brasil position performs unexpectedly, Exelon can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Exelon will offset losses from the drop in Exelon's long position.| Engie Brasil vs. Red Electrica Corporacion | Engie Brasil vs. Centrais Eltricas Brasileiras | Engie Brasil vs. Centrais Electricas Brasileiras | Engie Brasil vs. Enel Chile SA |
| Exelon vs. Duke Energy | Exelon vs. Dominion Energy | Exelon vs. Southern Company | Exelon vs. Consolidated Edison |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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